A Debenture Will Be Issued at Par Value

question 34

Multiple Choice

A debenture will be issued at par value:

• A) Because that is the offer price. If the rate offered is too low the offer will be under-subscribed, so those who take it up will receive more interest.
• B) On most occasions, because management is careful to issue the debentures at an amount close to the market rate.
• C) On those rare occasions when the coupon rate is the same as the market rate.
• D) On those occasions when the offer rate is equal to the coupon rate.
• E) None of the given answers.

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Definitions:

Levels of Management

The hierarchical layers of authority in an organization, typically ranging from top management to middle management to lower management.

Chain of Command

A hierarchical structure in an organization defining the authority and communication line from the highest to the lowest ranks.

Successively Higher Levels

Progressive stages or tiers in a hierarchy, organization, or process where each level represents an advancement or escalation from the previous.

Authority

The ability or jurisdiction to instruct, decide, and compel adherence.